There is no doubt that in recent years the global
economic recession has had a huge impact on the sport of golf most particularly
throughout the established markets of Europe and America.
In the 1990s and early 2000s, selling memberships to golf clubs was
a relatively easy affair as people were making money and weren't overly worried
about club initiation fees and annual dues.
Now, the financial climate has changed. Club incomes are on the slide and many are fighting to survive as cash-strapped
players look for less expensive fun resulting in many clubs scrapping expensive
membership fees and offering cut-price deals to stem the exodus. Quite simply, the party is
over and clubs will have to survive on a lot less revenue than they are used to.
So what are the core reasons behind the decline in the
fortunes of many golf clubs?
First and foremost if we look at the newer golf courses
and resorts, they predominantly have very high costs associated with their
projects and have business models that typically require membership sales in
excess of 300 people as well as the steady sale of property over a defined
period in order to survive. They say that timing is everything in business and
while there have been glorious successes, (Mount Juliet and the K Club both established
in the early 1990’s), more often than not these ventures have not been able to
generate the required amount of revenue to break-even. Therefore they have
either had to be supported elsewhere (owner, banks etc) or have simply gone
The vast majority of clubs in Ireland are
traditionally private members' clubs, established a long time ago to facilitate
the then growing demand for the game. Today, these clubs are very much
threatened by a number of factors, such as:
- The over supply of clubs in the market.
- The abolition of upfront initiation membership
fees which are so critical to many clubs.
- Declining membership (people leaving the club and
not being replaced).
- Ageing membership – members moving to different
categories, paying less money.
- Declining revenues from the bar and dining room.
- Declining green fee revenue due to competition
and decrease in corporate and society participation.
Many of these issues can of course be fatal to clubs
already operating efficiently but for most clubs there is still a lot which can
be done to help alleviate their plight. The areas traditionally addressed by
clubs are their cost structure such as:
- Staff – They look at more efficient rostering of
hours or perhaps even a reduction in staff numbers during the winter
- A review of all costs such as insurance etc and
an overhaul of all spending
- Facilities – The reduction in clubhouse opening
hours and the more efficient use of heating, lighting etc?
In terms of being pro-active, clubs need
to regard themselves more as small businesses and embark on a proper marketing
campaign which will require them spending money to promote themselves properly
within the community with the message that they are open for business. They
should really get over the message of how much fun and value for money golf is
as a sport, not least for families.
Other areas that should be explored:
- Group Buying – Why not form an alliance with your
neighbouring golf clubs to group purchase core course materials?
- Sharing of Machinery – Most clubs have machinery
that is redundant for many months of the year. Why not create a
relationship with other clubs to share or rent out your machinery to other
courses, thereby reducing your costs.
- Sharing of non-essential staff – Good cost
savings can be made in this area with efficient rostering.
- Clubs need to improve the membership and customer
experience both on and off the course.
- Clubs can built up loyalty programs and reward
members for their good custom.
- Clubs can facilitate the membership by offering them
meeting rooms and conference facilities.
- Clubs can proactively seek to encourage and
promote junior programmes in their respective clubs thereby attracting
more parents to engage with the club.
- Socially clubs can become a little less formal
and more accommodating towards the needs of the younger generations as
they are the ones who will spend and guarantee its survival.
At a time when the profile of our professional golfers
has never been higher, it is now essential that the entire golfing community
works harder to promote themselves and the game. For many existing clubs, this
may well mean a complete movement away from what has been the norm for many
years. Like all small businesses, clubs must understand that without demand for
their product and service they simply will not survive.